THE education export industry has to find a new way to prosper now that the government has made it harder for would-be migrants to use study as a route to permanent residency, social researcher Bob Birrell says.

In the Monash University journal People and Place, Dr Birrell said the industry, whose phenomenal growth had been helped by foreign students seeking permanent residency as skilled migrants, had reached a crossroads.

Dr Birrell is co-director of Monash’s Centre for Population and Urban Research, People and Place’s publisher.

He said a change to the skilled migration rules in December last year, coupled with other reforms, would put permanent residency beyond the reach of many former overseas students with poor English, little work experience and low-value qualifications in hospitality and cooking.

“Those providers who have built their business around marketing a credential that will lead to permanent residence must refocus their business,” he said. “They need to sell credentials that overseas students believe they can take back to their country of origin with profit.”

But Dennis Murray, executive director of the International Education Association of Australia, said the new rules would have little effect on universities although they would cut growth in hospitality courses. “We don’t see a wholesale collapse of the industry, which is what Bob would like to see,” he said.

Dr Birrell argued the appeal of permanent residency and lax rules for skilled migration delivered strong growth in business and information technology courses at universities in the early 2000s and even more dramatic growth since 2005 in hospitality, cooking and hairdressing courses at private colleges and TAFE institutes.

But the education business had come to distort the migration program, producing graduates ill-equipped or uninterested in the jobs they were supposedly trained for. Dr Birrell said the government took a stand, culminating in the tough new rules of December last year, but the surge in student numbers had carried through into the first few months of this year, for which there was official data.

“My expectation would be that the enrolments in the hospitality area will decline significantly once the message gets back via the recruitment network to the countries of origin,” he said.

Dr Birrell said higher education also would lose fee income because graduates in accounting, a field that had enjoyed strong growth, had to have better English or take on an extra year of professional training.

But he said the government needed to back its tough policy changes with a clearer message to the industry. Instead, it had allowed more than 40,000 former students to stay on temporary and bridging visas, even though most had little chance of securing permanent residency. Most had taken up temporary visas created to soften the blow of September 2007 reforms aimed at the poor English and poor employment prospects of former students.

Dr Birrell said another, sizeable group had found a loophole. In the year to May the Department of Immigration and Citizenship had allowed 15,417 former students to apply for permanent residency as skilled migrants, despite their lacking occupations on the tough new critical skills list ushered in last December. The department had put off the processing of applications by those lacking critical skills, meaning these students remained on bridging visas.

The department’s decision to accept these applications, and the $2105 fee, was “contentious and unwise” because it suggested these students eventually might win permanent residency despite not meeting the tight new rules.

“I think there’s something of a battle going on within government as to which should be given priority: the maintenance of the (overseas student) industry on the one hand and dealing with the immigration problems generated by it on the other,” Dr Birrell said.

An Immigration Department spokesman said the government was pursuing a more carefully targeted migration program, given the difficult economic times.

“Australia is giving priority to those people sponsored by employers or on the critical skills list, thus ensuring the nation gets people with the skills the economy and employers need,” he said.